Nashville's One Weird Trick for Reviving the Starter Home

It turns out that if you make it easy for local developers to build starter homes, they will build a lot of them.

Photo courtesy of Alex Pemberton

Amid a deepening nationwide housing shortage that has sent prices and rents spiraling upward, housing affordability emerged as a top issue in the 2024 presidential election: In August, Vice President Kamala Harris committed to building 3,000,000 additional homes over her term. For his part, President-elect Donald Trump has proposed building new cities on federal land.

At the root of the problem is the disappearing American starter home. A morass of zoning rules — from bans on multifamily housing to large minimum lot size mandates — have made it illegal to build the sort of inherently affordable housing that once ensured widespread homeownership. In cities across the country, duplexes, townhouses, and homes on smaller lots have nearly gone extinct.

That is, except for in Nashville: Over the past 15 years, the city has built tens of thousands of townhouses and small-lot homes in neighborhoods close to the city’s downtown core. The Nashville starter home renaissance — the largest infill homeownership building boom in per capita terms in the country — has helped to keep the Music City relatively affordable, even as nearly 100,000 new residents came knocking.

To better understand how Nashville bucked the trend, I spoke with Charlie Gardner, a research fellow with the Mercatus Center at George Mason University and the co-author with Alex Pemberton of a new report on the obscure Tennessee law that enabled the building boom. Our conversation has been edited for length and clarity.

Duplex zoning is surprisingly common in Nashville.

Many cities and states are scrambling to legalize small-scale infill housing. What does Nashville’s zoning allow?

Nashville is distinctive in that its original 1933 zoning ordinance allowed duplexes in all residential zones. Single-family zoning was introduced in 1984 and has spread since then, but a majority of the residential land in [Consolidated Nashville-Davidson County] continues to allow duplexes.

The critical change was the state’s adoption of the Horizontal Property Regime [HPR] law in 1990, which created a fast and cheap process for selling units in a duplex in a way that could work with conventional mortgage finance. Through an HPR, developers can create a “townhouse corporation” that owns the land around the homes, with homeowners still owning the individual units. Tennessee’s HPR resembles a [homeowners association or HOA] but is much simpler than a typical state HOA law.

This also bypasses a long and costly subdivision process, as well as minimum lot size rules that may prevent this sort of development. It also avoids the various pitfalls associated with condominium projects, such as defect liability issues and more complicated financing.

Line goes up.

Locals call them “tall skinnies” or “two-on-ones.” What exactly is being built in Nashville?

Across Nashville, you are seeing hundreds of projects that consist of two homes sitting side by side on the same lot. Hence, the “two-on-one” name. The term “tall skinny” arose from the perception that the homes were narrow relative to their height, even though most aren’t more than two stories high. From the outside, these usually look like modestly-sized homes sitting side-by-side.

Thanks to Tennessee law, it’s easy to build townhouses, duplexes, and small-lot homes where the developer can sell the units separately. You can also build an additional home next to an existing home — almost like an accessory dwelling unit, except that you can sell it. Since you aren’t subdividing the land, and each unit isn’t required to have street frontage, it’s possible for local builders to add a new home to the backyard of existing homes and use Nashville’s existing system of alleys for car access.

Yet another neighborhood ravaged by density.

Why not just build a duplex? Why can’t Nashville just lower minimum lot sizes?

Nashville has a booming multifamily rental market, particularly in the city’s downtown, where zoning is pretty flexible. With all this new rental housing coming online, building duplexes for rent has less market appeal than building housing that’s for sale to homeowners. That is where the HPR comes in.

The city could overhaul its minimum lot size rules to legalize traditional lot splits and streamline the subdivision process to make it cheaper and easier, but the status quo with the HPR is so workable that there hasn’t really been much demand for these types of reforms.

What can other cities and states learn from the Nashville experience?

Over the past few years, many states have debated zoning reforms to legalize accessory dwelling units or so-called “missing middle” forms of housing, such as duplexes, triplexes, and cottage clusters. For example, Arizona and Montana both passed state laws allowing for missing middle housing in 2023. Many more cities, such as Minneapolis and Sacramento, have legalized duplexes and fourplexes.

Nashville shows us that these sorts of reforms will be much more effective if there’s an easy way to sell individual units rather than just rent them all out. Some states don’t have laws for this at all and should consider adopting a law that’s similar to Tennessee’s, allowing for common ownership of the lot and individual ownership of the home. States that already do have a law of this nature should look to Tennessee for ideas on how they might streamline their statutes for small, infill projects.

Nashville proves that if you make it easy for local developers to build starter homes, they will build a lot of them.